A Panorama investigation into the billionaire Barclay brothers claims that London’s Ritz hotel has not paid any corporation tax since it was acquired by the brothers 17 years ago.
The BBC documentary, whose broadcast was postponed by the previous Director-General George Entwistle, was finally given the go ahead by the corporation’s acting boss, Tim Davie and focused on the tax affairs of Sir Frederick and Sir David Barclay and their businesses.
The programme focused attention on the Ritz hotel, which made a profit of £6.7m in 2010. The BBC said a study of the Ritz’s accounts shows it has used tax relief to cut its corporation tax bill to nothing while also reinvesting revenue. There is no suggestion there is anything illicit in the arrangement however Panorama said a zero corporation tax bill was similar to the pursuit by another Barclay business, the catalogue company Littlewoods, of a VAT reimbursement from HMRC potentially worth £1bn.
The publicity-shy brothers, who also own the Telegraph newspaper titles, told the BBC that they are now not involved with the day-to-day running of the UK corporations after retiring to Monaco 20 years ago. The BBC said The Ritz, Littlewoods and the Telegraph group are managed by offshore trusts, whose meetings are attended by one of the brothers.
In a statement, Sir David said: “We have not attended office, management of board meetings in the UK since leaving the country. My brother and I have no editorial, political or economic power in the UK.”
Littlewoods, the online shopping catalogue, was bought by the twins in 2002 and had previously won a VAT reimbursement and interest amounting to £472m from the UK tax authorities for payments dating back to the 1970s. However since the takeover by the Barclays, the company has begun legal proceedings to seek an additional £1bn in compound interest in a test case which could lead to similar claims from other businesses.
Conservative MP, Nadine Dorries, said she was shocked at the size of the claim by the brothers’ catalogue company.
She told the BBC: “They’re incredibly wealthy men…I think it is just utterly appalling.”
Aiden Barclay, the son of Sir David, who manages the UK businesses, said the HMRC had openly accepted it took tax incorrectly from Littlewoods, adding its directors had a legal duty to retrieve the company’s money.
The Ritz, which is reported to be worth at least £625m, has proven a profitable investment by surviving the economic crisis with improved turnover and profits. Aidan Barclay said the luxury London hotel had not paid dividends to its investors and profits had been put back into the business.
